SBA Proposes Amendments to Sole Source Authority for Women-Owned Small Businesses

Posted on May 19, 2015


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On May 1, 2015, the U.S. Small Business Administration (SBA) announced plans to expedite the implementation of the sole source authority provision in the Women-Owned Small Business (WOSB) Federal Contracting Program and changed the deadline to study which industries are underrepresented by WOSBs.

The SBA proposes to amend its regulations to implement Section 825 of the National Defense Authorization Act for Fiscal Year 2015 (2015 NDAA). This section included language granting contracting officers the authority to award sole source contracts to WOSBs and Economically Disadvantaged Women-Owned Small Businesses (EDWOSBs). Section 825 of the 2015 NDAA also changed the deadline for SBA to conduct a study to determine the industries in which WOSBs are underrepresented to January 2, 2016.

The Women-Owned Small Business Program and Sole Source Authority

The Women-Owned Small Business Program authorizes Federal contracting officers to restrict competition to eligible WOSBs or EDWOSBs for Federal contracts in certain industries. The SBA’s proposed rule amends the definitions of the terms ‘‘EDWOSB requirement’’ and ‘‘WOSB requirement’’ to include sole source contracts. The proposed rule also contains amendments concerning the industries in which a contracting officer is authorized to restrict competition under theWOSB program, to address the new sole source authority.

Under this statutory authority, if a contracting officer conducts market research in an industry where aWOSB or EDWOSB set aside is authorized, and the contracting officer cannot identify two or moreWOSBs or EDWOSBs that can perform at a fair and reasonable price, but identifies one WOSB orEDWOSB that can perform at a fair and reasonable price, the contracting officer can award the contract on a sole source basis, if the value of the contract, including options, does not exceed $6.5 million for manufacturing contracts and $4 million for all other contracts.

Underrepresented WOSBs

The original deadline for the study to determine in which industries WOSBs are underrepresented was 2018 (and every 5 years thereafter). Section 825 of the 2015 NDAA changed the deadline to within 3 years of the date of enactment of the 2013 NDAA, which means the study must be conducted by January 2, 2016.

Certifications

Section 825 also created a requirement that a firm be certified as a WOSB or EDWOSB by a Federal Agency, a State government, SBA, or a national certifying entity approved by SBA. The SBArecognizes that establishing a certification requirement and process will require a more prolonged rulemaking before the SBA can establish such a program. In order to implement the new WOSB sole source authority as quickly as possible, the SBA announced that it will use existing program rules and procedures, while it proceeds with the implementation and certification requirement through separate rulemaking.

Significance

The National Women’s Business Council highlights the significance of the SBA action, noting: “Sole source authority is an important tool for both women owned businesses and government agencies. Sole source authority will increase the access that women owned businesses have to millions of dollars in contracts in the federal marketplace, and will enable more government agencies to reach the 5% procurement goal for women owned businesses – a goal that has never been reached since it was established by legislation 20 years ago.”

For additional information, please contact David M. Mosier, a Shareholder with Knox McLaughlin Gornall & Sennett, P.C.’s Business & Tax Department, by calling 814-459-2800 or emailing dmosier@kmgslaw.com.

David M. Mosier is also an ATHENA PowerLink® Panelist, offering advisory services to women business owners through the ATHENA PowerLink® program.

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